Brookfield to invest Rs800 crore in Total Environment’s projects

Bengaluru: Canada’s Brookfield Asset Management Inc. is at an advanced stage to invest around Rs800 crore in Total Environment Building Systems Pvt. Ltd, a Bengaluru-based builder of homes, from its global fund, according to two people familiar with the transaction.

The capital will help Total Environment refinance most of its debt and replace the existing debtors with Brookfield as the main lender. Brookfield started investing in residential projects in India from its new $9 billion global real estate fund last year.

The first deal saw Brookfield investing Rs450 crore in Peninsula Land Ltd’s premium project in Byculla, Mumbai. The Total Environment deal would be the second investment from Brookfield’s global corpus.

“The capital will be given in the form of structured debt with an upside share, against seven of Total Environment’s projects in Bengaluru. Half of the money will be used for refinancing and the rest as working capital for its ongoing projects,” said one of the two people cited above, requesting anonymity. “The deal is expected to close by the end of the month,” said the second person.

Kamal Sagar, principal architect and chief executive of Total Environment, declined to comment. In 2014, Brookfield had invested around Rs200 crore in Total Environment via the Peninsula Brookfield India Real Estate Fund, which is managed by Peninsula Brookfield Investment Managers Pvt. Ltd, its venture with Peninsula Land.

Brookfield has about $240 billion in assets under management globally. In India, it has built a $2 billion asset base over the past seven years, spanning real estate and infrastructure projects. Total Environment, which has projects in Bengaluru, Pune and Hyderabad, has raised funds from various lenders in the past few years.

In end-2016, L&T Finance Holdings Ltd invested Rs200 crore in its project to partly refinance an earlier loan from IndoStar Capital Finance Ltd and partly for construction. Investments in the residential sector has been mostly refinancing deals where funds or non-banking financial firms step in to refinance or replace exiting lenders.

Currently, with tepid projects sales and high demand for capital, funds are being cautious about who they partner with and the projects they fund.

“The real estate sector is going through a rough patch and it’s not a choice but a necessity for developers to opt for refinancing, presuming that the markets don’t pick up and sales continue to be slow. Investors today are refinancing projects that have enough runway to service debt and are in the right hands,” said Shobhit Agarwal, managing director-capital markets at property advisory JLL India.